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Author Question: You want to accumulate $2,700,000 in your RRSP by your retirement date, which is30years from now. ... (Read 51 times)

xxxxxxxxxxxx

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on: Aug 7, 2023

Question 1

You plan to make annual deposits into a bank account that pays a6% nominal annual rate. You think inflation will amount to 2.80% per year. What is the expected annual real rate at which your money will grow?

◦

2.98%


◦

3.11%


◦

3.24%


◦

3.68%



Question 2

You want to accumulate $2,700,000 in your RRSP by your retirement date, which is30years from now. You will make 30 deposits into your plan, with the first deposit occurring today. The plan’s rate of return typically averages10%. You expect to increase each deposit by3% as your income grows with inflation. (That is, your second deposit will be3% greater than your first, the third will be3% greater than the second, etc.) How much must your first deposit at t = 0 be to enable you to meet your goal?

◦

$8,643.25


◦

$9,871.53


◦

$10,645.58


◦

$11,437.66

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by xxxxxxxxxxxx on Aug 7, 2023

ryanb

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Reply #1 on: Aug 7, 2023
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xxxxxxxxxxxx

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

Perkypinki

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Reply 3 on: Yesterday
:D TYSM

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